The Child of Owner (COO)

By Prof. Enrique Soriano

 

Family conflict is normal, unresolved conflict is not. And there is no family business story that doesn’t involve some degree of conflict. These conflicts can range from or a combination of founder induced, entitled children, poor communication, unclear roles, sibling rivalry, family members having differing purposes and goals for the business, personality differences, power struggle, parents playing favorites, in laws extending their influence and marital conflicts, among others–all of these issues culminating into messy ownership disputes that only lawyers and the tax bureau will certainly benefit. Understanding and accepting conflict as natural will ease the burden of trying to avoid it and recognizing that conflict can also be helpful—to the business as well as the family—will make dealing with it easier.

 

Let me start with the root. According to psychologists, conflict in family owning businesses typically starts early on, at the entrepreneurial stage. In my experience helping family owning businesses in Asia and North America,  many challenges afflicting family enterprises begins with the founder. These entrepreneurs that start their own business do so because of unresolved conflicts with their own parents. They feel driven and compelled to start a business in order to escape the authority of a more powerful figure, typically their fathers. The business becomes their circle of influence, a sort of little kingdom, where they can wield their power without being challenged. Those who worked for these founders learn quickly that to hold on to their jobs, they should not question the founder’s authority. The problem starts when an adult child is lured into the trap of joining the family business without any outside work experience including the rules of engagement (code of conduct).

 

The entry of the next generation “child of owner” causes rivalry never before experienced by the founder. As the adult child encroaches onto the founder’s territory and starts questioning the way the business is run, it now becomes a challenging event for the founder.  This phase is wildly a love-hate relationship between the founder and the offspring and can signal a clear departure from the unconditional love the parent founder bestowed on the child during his or her youth. At this juncture, the founder transforms into a rigid and unreasonable business owner that considers his or her adult child an adversary in the business.

 

Harry Levinson, a Harvard Business Review author, explicitly states that “the fundamental psychological conflict in family businesses is rivalry, compounded by feelings of guilt, when more than one family member is involved. The rivalry may be felt by the founder when he unconsciously senses that subordinates (family and non-family executives) are threatening to remove him from his center of power.” The founder’s desire to create a dynasty, even on a small scale according to author Marshall Paisner, “clashes with his or her realization, that some of the power must be yielded. At the same time, the son or daughter tries to gain their independence, and take on increased responsibility, but the parent resists loosening his or her hold on the reins. Eventually the child rebels against the constant intrusions and broken promises of retirement on the part of the founder.”

 

As what Levinson highlighted, “the son resents being kept in an infantile role—always the little boy in his father’s eyes—with the accompanying contempt, condescension, and lack of confidence that in such a situation frequently characterize the father’s attitude. He resents, too, remaining dependent on his father for his income level and as often, for title, office, promotion, and the other usual perquisites of an executive. The father’s erratic and unpredictable behavior in these matters makes this dependency more unpalatable.”